Morgan Stanley issues a 30-day tactical bullish call on Haidilao

Overview

This is a Morgan Stanley tactical note on Haidilao International Holding Ltd (6862.HK). The core call is that, catalyzed by founder Zhang Yong's plan to buy more than HK$100mn of shares in the open market, Haidilao could outperform the sector over the next 30 days.

Core views

The report's main views are as follows: first, the founder and controlling shareholder's first purchase since the 2018 IPO signals recognition of the company's value; second, Haidilao's stock has fallen 19% since late February, materially underperforming China consumer stocks and the roughly 4% decline in MSCI China, leaving room for short-term sentiment recovery; third, based on gradual macro recovery, low inflation, a slow pace of store-network expansion, operating leverage, and cost control, Morgan Stanley expects the company's EPS CAGR to be 27% from 2025 to 2027.

Analysis framework

The report uses an event-catalyst and relative-performance framework, focusing on the impact of the founder's share purchase on market sentiment and combining target P/E valuation, earnings-growth expectations, macro recovery, and store-expansion pace to judge near-term share-price performance.

Methodology notes

• Valuation methodstarget P/E

  20x 2026e P/E

  The base case uses 20x 2026e earnings as the target P/E, taking into account a gradual macro recovery, low inflation, slow store-network expansion, operating leverage, and cost control.

• scenario_analysissubjective probability

  subjective scenario probability

  The report states that scenario probabilities are illustrative and based on the analyst's subjective assessment of the likelihood of the relevant scenarios.

• rating_frameworkMorgan Stanley relative rating system

  relative rating system

  Morgan Stanley uses Overweight, Equal-weight, Not-Rated, and Underweight relative ratings to assess risk-adjusted total return over the next 12 to 18 months versus the covered universe.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Haidilao International Holding Ltd (6862.HK)

  Coverage name

  Strengths

  Planned founder buying, improving operating leverage, tight cost control, and an expected 27% EPS CAGR from 2025 to 2027.

  Weaknesses

  The stock has fallen sharply recently, and store expansion and demand recovery still depend on the macro environment.

  Comparison

  The stock is down 19% since late February, underperforming China consumer stocks and MSCI China's roughly 4% decline.

  Risks

  Slow table-turnover recovery, raw material inflation, delayed store openings, rising employee costs, or overly aggressive cost control that hurts service quality.

Key data

• Planned purchase amount>HK$100mnZhang Yong plans to buy shares from the open market within 12 months.
• Planned purchase ratio0.13%Approximately the share of total free float.
• Recent share-price performanceDown 19% since late FebruaryThe report says China consumer stocks and MSCI China both fell by about 4% over the same period.
• Target P/E20x 2026e earningsUsed for base-case valuation.
• 2025-2027 expected EPS CAGR27%Driven by operating leverage and tight cost control.
• Target-price clueHK$20From the historical price-target chart text; the formal target-price page information is incomplete.

Impact & implications

The founder's buying plan may improve investors' perception of the company's value and management confidence, and it could serve as a short-term sentiment catalyst after the sharp share-price pullback. If macro recovery, demand recovery, and store-expansion pace are better than expected, there is room for upgrades to valuation and earnings expectations; conversely, a slow recovery in table turnover, cost pressure, or excessive cost cutting that hurts service quality could weaken the medium-term growth outlook.

Risks

• Macroeconomic recovery slower than expected.
• Demand recovery weaker than expected.
• Slower-than-expected table-turnover recovery.
• Raw material cost inflation.
• Delays in new store openings.
• Employee cost increases exceed expectations, or overly aggressive cost control damages service quality and weakens the medium-term growth outlook.
• Morgan Stanley has or may seek business relationships with the covered company, which could create a potential conflict of interest.

What to watch

• The actual pace and amount of Zhang Yong's buying plan.
• Haidilao's share-price performance versus the China consumer sector and MSCI China over the next 30 days.
• The pace of macroeconomic and dining-demand recovery.
• Table-turnover recovery, store-expansion pace, and new-store ramp-up.
• Changes in raw material and employee costs.
• Whether the company can maintain a balance between cost control and service quality.